Covid-19

Bruno Albuquerque, Alexandra Varadi, 23 May 2022

Mortgage payment holidays were introduced in the UK March 2020 to help households who might have struggled with mortgage payments during the Covid-19 pandemic. Using transaction-level data, this column finds that payment holidays supported consumption during the pandemic for more financially vulnerable households, while more financially stable households on a payment holiday increased their savings instead. These results suggests that payment holidays may have been instrumental in supporting household balance-sheets following the negative aggregate shock triggered by Covid-19. 

Ting Lan, Davide Malacrino, Adil Mohommad, Andrea Presbitero, Galen Sher, 11 May 2022

Trade in goods has rebounded quickly from the pandemic, while trade in services has not. This column finds that the pandemic broke the old trade patterns and that lockdowns had unintended international spillovers. Although global value chains have adapted, ongoing supply disruptions and the risk of future adverse shocks point to the need for more resilient value chains. The authors argue that in contrast to those calling for reshoring, a better way to build resilience is to diversify away from domestic sourcing of inputs and make it easier for producers to substitute between inputs supplied by different countries.

Marco Pelosi, Giacomo Rodano, Enrico Sette, 04 May 2022

Governments around the world enacted unprecedented measures to support firms impacted by the Covid-19 pandemic. This column focuses on Italy to examine the extent to which these measures ended up also benefitting non-viable but still active firms. The authors find that ‘zombie firms’ were less likely than healthy firms to access public support measures in the form of either grants, debt moratoria, or government-guaranteed loans, suggesting that these measures did not contribute to a zombification of the economy.  

Stefanie J. Huber, 30 April 2022

Living through the COVID-19 crisis affected women and men differently. This column presents representative survey evidence from five European countries that women reduced their pre-pandemic consumption substantially more than men. Perceptions of infection risk and precautionary saving motives are only a partial explanation. Instead, men report realising that they had not missed certain goods and services during lockdown, while women attribute their reduced expenditures to perceived financial constraints – suggesting that women felt the economic consequences of the pandemic more intensely than men.

Dimitris Georgarakos, Geoff Kenny, 28 April 2022

The COVID-19 pandemic shock posed an enormous challenge to fiscal policy in supporting household consumption. This column discusses the extent to which the pandemic-related fiscal interventions influenced consumers’ spending behaviour. Using new high-frequency data, the authors find that improving perceptions about the adequacy of fiscal interventions incentivised spending. Importantly, this perceptions channel operated equally strongly for consumers who received government support and for those who did not. Consumers who viewed the adequacy of fiscal packages more favourably also expected higher future incomes and easier access to credit, and did not anticipate an increase in taxes.

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